Soured Pauma casino deal sparks lawsuit

A spokesman for casino powerhouse Caesars Entertainment Inc.
said Friday a recent multimillion-dollar lawsuit filed against the
company by the Pauma Band of Luiseno Mission Indians is without
merit.

"We strongly believe that our dealings with the Pauma tribe at
all times were in good faith and fair, and I am not able to comment
any further, given the fact that the matter is in litigation," said
Robert Stewart, the company's vice president of communications.

Attorneys for the tribe filed the lawsuit against the company
late last month in San Diego Superior Court, over a deal that went
sour to build a state-of-the-art casino on tribal land off Highway
76.

In September 2003, the tribe struck a deal with Caesars to build
the $250 million Caesars Pauma resort and casino. Based on the
company's commitment to the agreement, according to the lawsuit,
the tribe then committed to an amended gaming pact with the state
in which it agreed to pay the state $5.7 million a year in exchange
for the right to substantially increase the number of slot machines
it has at its existing casino.

However, the lawsuit states, tribal officials began to notice as
early as April 2004 that "Caesars inexplicably began to drag its
heals."

Without the tribe's knowledge, however, "Caesars was then in
merger negotiations with Harrah's Entertainment Inc., a rival
casino concern," the lawsuit alleges.

The lawsuit claims that when Caesars first publically announced
in July 2004 that it was merging with Harrah's, Caesars assured the
tribe that the deal would not affect their contract to build the
casino.

But, "it was secretly being told by Harrah's to pull the plug so
that Harrah's could avoid litigation with the Rincon tribe," the
lawsuit alleges.

Harrah's operates the Harrah's Rincon Reservation Casino on
tribal lands of the Rincon Luiseno Band of Indians, about six miles
from where the Caesars Pauma casino was to be built.

A Friday news release from Harrah's Entertainment announced that
it expects to complete its deal to take over Caesars on June
18.

Pauma attorneys allege that "Harrah's used its leverage and
influence to have Caesars abandon the project and convince the
Pauma Tribe through duress, undue influence and fraud that
continuing the new casino project would be detrimental to the Pauma
tribe."

Later, the Pauma Tribe sought out another partner. And in
February, the tribe announced that it had forged a new deal with
the Hard Rock Casino and Hotel to build the Hard Rock-Pauma casino,
which is scheduled to open in 2007.

The lawsuit alleges that because of the delays caused by
Caesars, its "conduct has caused, and will cause, significant
financial hardship on the Pauma Tribe."

As a result of Caesars alleged conduct, the tribe is suing the
company for, among other things, alleged breach of contract, fraud,
negligent misrepresentation and anti-trust violations. It is asking
the court to award it treble an unspecified amount of damages
related to its financial losses, punitive damages and attorneys'
fees.

An attorney representing the tribe in the lawsuit said recently
that he is seeking "millions of dollars in costs the tribe has
incurred."

The money is to pay for lost profits and "costs the tribe has
incurred that they wouldn't have incurred, if not for the agreement
with Caesars," said Kirk Hulett, an attorney with San Diego-based
law firm Hulett, Harper & Stewart LLP.